HMRC say I have overpaid £3,500 in tax; I haven't. What is going on at HMRC?

SnowMan

I sent in an R40 in September to reclaim some tax on savings interest for 2023/2024 that was paid as part of an estate distribution to me as a beneficiary. The estate had paid the estate administration period tax on savings which was above the de minimis limit and so the estate distribution included net savings interest. I was in self-assessment but you can't do an online tax return (unless you use commercial software) if there is estate income to declare, so went the R40 reclaim route after discussing it with HMRC to reclaim the overpaid tax on savings interest. HMRC took me out of self-assessment. My tax position means that this estate savings interest is not subject to tax in my hands (or taxed at 0% if you prefer).

HMRC write back to me and say that my R40 looked wrong because of the net interest, all savings interest is paid gross they say, and they were closing my claim. I ring HMRC up to explain it was net interest from an estate distribution and so wasn't wrong (I had correctly included it in the trust, settlement and estate section of the form) and not to close my claim, but they refuse to deal with it by phone and tell me to write in.

So I wrote in explaining this in October. Everything goes quiet for a few months. I rang up again last week and it turns out HMRC had misfiled my letters.

Anyway today a message appears on my government gateway account to say that they have calculated my tax for 2023/2024 and that I have overpaid over £3,500 in tax in 2023/2024. I immediately knew this was wrong and could see HMRC had overlooked that they had already paid me back around £3,500 in overpaid tax relating to a pension flexibility payment in May 2023 (following an in year P55 claim) and when you deduct that everything agrees my figures and they owe me about £100 in overpaid tax.

So I ring up HMRC when their phone lines open. The adviser seemed to struggle with the simple concept of them not deducting the £3,500 from the tax they owe me even though I can supply figures and dates. He wants me to complete the R40 a second time. I explain all that would achieve would be for them to get an identical R40 to the original. He won't back down. I ask to put in a complaint, but he refuses to log the complaint. He then says he needs to put me on hold for a bit, and five minutes later there is a message 'your call is being disconnected' and the phone goes dead. 

I ring back and eventually after a 15 minute wait get through to another adviser. She says that disconnects quite often happen when their connection is lost. Fortunately she is more empathetic than the original adviser. She says she will have to pass it over to the R40 team and they will call me back at some point. So that's where I'm at.

Not sure what I am trying to achieve by posting this, but the whole thing seems bizarre. How can HMRC overlook a £3,500 tax repayment? If I had I clicked on the option to get the overpaid tax paid to me in my gateway account it sounds like it would have been paid to me within 5 working days. I guess they would have noticed the error at some point, but still seems very strange.

We read here a lot about people still waiting for their 2023/2024 tax to be calculated. HMRC do seem to be struggling a bit. 

(amounts edited)            

Troytempest

My 23/24 tax calculation came through today - thankfully more simple than yours......

SnowMan

They are now telling me I have to fill the R40 in again because I supposedly put £1 of interest from a cash management account that runs alongside my SIPP on the wrong page of the form.  

Dazed_and_C0nfused

SnowMan said:

They are now telling me I have to fill the R40 in again because I supposedly put £1 of interest from a cash management account that runs alongside my SIPP on the wrong page of the form.  

How do they know that?

Is the £5,000 still available to transfer into your bank account?

To be honest I would be inclined to claim that and then sort out the correct position after.  You can then earn some interest on the surplus £4,900 while HMRC get their act together.

Worst case scenario you should get 3 months to pay the £4,900 back once the correct position is finalised.

SnowMan

Dazed_and_C0nfused said:

SnowMan said:

They are now telling me I have to fill the R40 in again because I supposedly put £1 of interest from a cash management account that runs alongside my SIPP on the wrong page of the form.  

How do they know that?

Is the £5,000 still available to transfer into your bank account?

To be honest I would be inclined to claim that and then sort out the correct position after.  You can then earn some interest on the surplus £4,900 while HMRC get their act together.

Worst case scenario you should get 3 months to pay the £4,900 back once the correct position is finalised.

Typo should have been £3,500 not £5,000. 

It was available but they've now disabled the bank account transfer option after I told them about their error. Still showing as tax refund due though of that amount.

They made me send in details of every single interest payment I had received in the tax year and I included the £1 with it and the tax certificate.  

They ignored what I sent in and instead of cross checking against their own records they then sent me in their own list of interest payments and told me to check against my records. The two tied in exactly except they missed a few small interest payments, and the £1 payment. It was almost impossible to read their list it was in super small text. And the sum of the interest on their list is different to the interest on the P800. My figure, the correct figure, sits between the two once you add in the executors account interest.

They also won't accept that the interest paid into an account in my name and used solely as an executor account is not my interest, even though as executor I paid tax on administration period interest to HMRC earlier in the year prior to distribution. It doesn't actually affect the amount of the tax refund due but it's just nonsense on their part to claim that. Not every bank allows you to set up an executor account in the name of the deceased's estate.

I've sent a complaint letter in. Because I raised a complaint they seem to be deliberately causing trouble.

SnowMan

SnowMan said:

Not sure what I am trying to achieve by posting this, but the whole thing seems bizarre. How can HMRC overlook a £3,500 tax repayment? If I had I clicked on the option to get the overpaid tax paid to me in my gateway account it sounds like it would have been paid to me within 5 working days. I guess they would have noticed the error at some point, but still seems very strange.

         

In answer to my own thread title this seems to be what is going on at HMRC

https://www.computerweekly.com/news/366619484/HMRC-working-to-resolve-system-glitch-that-doubles-self-assessment-tax-rebates

(thanks to Dazed_and_C0nfused for posting that link on another thread)

So it looks like my situation was one of these 'very rare' situations.

What is quite shocking is the difficulty I had in getting HMRC to acknowledge that they were trying to overpay me over £3,000 (see earlier posts). When I rang HMRC to tell them, they weren't interested in the duplicated tax refund, refused to accept my complaint about this initially, and then cut off the phone call, and when I called back a second and third time again did not deal with it. 

(sarcasm alert) Good to see how seriously the department took the issue here in my case.

To update, after eventually getting my complaint registered, I received a phone call about 2 weeks ago from the HMRC complaints department. They'd clearly looked through my paperwork now and couldn't have been more apologetic and helpful in resolving things. They also confirmed that their mistake happened because their self assessment and PAYE systems were not properly set up to communicate with each other. So I've now received the roughly £100 tax refund which I am due, albeit my gateway account still shows my tax for 2023/2024 has not been calculated.

Dazed_and_C0nfused

Things going wrong are one thing but it shouldn't need a complaint to get it resolved 😔